- Regulators warn of reduced competition
- Deal could create market duopoly
What happened: Telefónica’s Colombian exit raises competition Issues
Spanish telecom giant Telefónica has agreed to sell its 67.5% stake in Colombia Telecomunicaciones (Coltel) to Luxembourg-based Millicom for approximately $400 million. The transaction, announced in March 2025, is part of Telefónica’s strategy to reduce its presence in Latin America and focus on core markets. Millicom aims to acquire full control by also purchasing the remaining 32.5% stake held by the Colombian government and other investors. The deal is subject to regulatory approval from Colombia’s Superintendence of Industry and Commerce (SIC).
However, Colombia’s Communications Regulation Commission (CRC) has expressed concerns that the merger could significantly reduce market competition. The combined entity would control over 38% of the mobile market, closely rivaling market leader Claro’s 51.65% share. The CRC warns that this consolidation could limit options for other operators and reduce competitive pressure, potentially leading to higher prices and less innovation. The regulator’s analysis suggests that while efficiencies might improve user welfare, they could also facilitate greater coordination among major operators, increasing the risk of anticompetitive practices.
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Why it’s important
The proposed acquisition of Telefónica’s Colombian operations by Millicom could significantly alter the competitive landscape of the country’s telecommunications sector. By merging the second and third-largest mobile operators, the deal would create a strong competitor to Claro, potentially leading to a duopoly. Such market concentration raises concerns about reduced competition, which could result in higher prices and diminished service quality for consumers.
Regulatory authorities are scrutinizing the deal to assess its implications for market dynamics and consumer welfare. The outcome of this review will set a precedent for future mergers and acquisitions in the region’s telecom industry. It also highlights the challenges regulators face in balancing industry consolidation with the need to maintain a competitive market that fosters innovation and protects consumer interests.
